CSBS Releases AI Supervisory Framework

Best practices for managing AI systems are emerging as the technology becomes further embedded across the economy. Most recently, the Conference of State Bank Supervisors (CSBS) released a new suite of documents as part of its AI Supervisory Framework. This Framework gives state financial authorities the tools to properly examine and assess AI risks in regulated financial institutions. A recent Steptoe memo explains the framework’s core function:

“The Framework is designed principally for examinations of state-chartered banks and state-licensed nonbank financial institutions. It therefore does not itself establish an examination framework for national banks or other federally chartered institutions, although many of its risk-management concepts may be relevant beyond the institutions directly supervised by state financial regulators. While the Framework is designed to aid state examiners, it may also be used by interested financial institutions ‘to assess their own AI programs, establish sound AI governance and risk management, and prepare for examinations.'”

The memo notes that the framework consists of several publications. These are the Core Examiner Guide, the Examiner Work Program, the Nonbank AI Supplements, and the AI Use Case Risk-Tiering Worksheet. The AI Supervisory Framework is designed for regulated financial institutions, but other organizations can gain value as well. In particular, the Risk-Tiering Worksheet can be easily adapted for non-financial, non-regulatory use. Tools like these are valuable for helping institutions map AI use cases and their associated risks.